19 January 2012 4:01 PM

Forget buy-to-let, invest in a toll bridge (although not all come with a tax-free 25% return)

Forget buy-to-let, there may be more than a few people who read the story of the couple who bought the Whitney-on-Wye Toll Bridge, with its attached two-bedroom cottage, and thought I wish I’d invested in that.

The bridge cost £400,000 and is forecast by its new owners to generate £100,000 a year – and an 18th Century Act of Parliament when it was built granted it exemption from tax.

So, that’s a 25 per cent annual tax-free return derived from something that is also handily your home. That’s not just a potentially excellent infrastructure investment but also a prime example of the attraction of putting your money into a tangible object.

If you fancy a look you can take a walk along the bridge thanks to the magic of Google maps above.

The new owners of the toll bridge and cottage, sat on the river, in the beautiful countryside between Hereford and Hay-on-Wye, Grahame Penny and Maggie Taylor, unsurprisingly sound pretty pleased with their investment.

Costs will, of course, eat into the returns. The main ones apparently being any staff wages and the bridge’s annual £12,000 maintenance costs.

My quick back of an envelope calculation is that you could probably cover employing someone to collect the tolls and other associated costs with £18,000 – bringing a total return after costs of £70,000 a year. (That calculation involves you helping out with toll collection and may or may not have anything to do with the nice round number it delivers at the end.)

Accept those calculations and you’ve got a 17.5 per cent annual income return on an investment that has the potential for long-term capital growth, thanks to property values rising.

Investing in infrastructure for a solid income return is an old idea that raises its head above the parapet every so often, especially in volatile times like these when suddenly a dull regular payer looks pretty attractive. Chancellor of the Exchequer George Osborne hopped aboard the bandwagon in his recent Autumn Statement, with his plans to get pension funds to invest in building Britain great again.

Those dull but regularly paying assets range from toll bridges (although not generally as quaint as the River Wye bridge), to airports, railways, hospitals and schools.

For private investors, infrastructure investment trusts and funds that target these can deliver solid 5 to 6 per cent plus income returns and held within an Isa dividends are taxed at just 10 per cent, meaning the yield can beat buy-to-let.

If you don’t have the money to buy a toll bridge, do have the cash but don’t fancy owning one, or simply can’t find another to buy, but like the concept, this investing in infrastructure piece by my colleague Stephen Womack is a good starting point.

The winner for Whitney-on-Wye toll bridge owners, of course, is that if they can actually take this money tax-free, then the bridge’s income beats a higher salary once tax and national insurance are taken into account.

But their story highlights the growing temptation for those with the funds to do so to invest in tangible things. From physical gold, to fine wine, classic cars, or buy-to-let property, something that you can hold, see, or improve is very attractive to those who have been burned by overpaid yet underperforming investment professionals.

My natural cynicism leads me to question whether that projected £100,000 of the Whitney-on-Wye toll bridge is a bit high, the kneejerk aversion to any form of property investment will lead others to dismiss this investment out-of-hand.

But I hope Grahame and Maggie succeed with their toll bridge dream. It’s not just a great story but potentially a cracking example of investing outside the box.